On 28 January, US President Donald J Trump was impeached by the House of Representatives.
As a result, for only the third time in history, the Senate is holding a trial to determine whether to remove Trump from office.
Trump has now been cleared.
However BBC noted two days ago how even though Trump has been cleared, perhaps it implies that US politics has been damaged beyond repair, writing:
‘So much of what has gone awry has been resident in the trial of Donald Trump.
‘The partisan vitriol. The degradation of debate. The use of what were previously rarely used weapons – in this instance impeachment – to escalate America’s ceaseless political war.’
More to the point, the turbulent politics ahead may even clear the path for Trump to win again come this November.
But what does impeachment mean, exactly?
And does the stock market care about it? According to Jim, there’s only one condition markets don’t handle well…
Until next time,
Does the Stock Market Care about Impeachment?
Impeachment is one of the most widely misunderstood concepts in US Constitutional law and politics. Many people assume it equates to removal of a president from office.
Of course, that’s not the case. Impeachment is a formal charge aimed at the president by the House of Representatives. However, that charge has to be adjudicated by the Senate in a trial.
Three presidents have been impeached in US history, including Trump, but none have been removed from office.
The impeachment provisions in the Constitution are unusual in that they span two Articles.
Article I describes legislative powers, and Article II describes executive powers (Article III covers the judiciary). Here is the exact language from the Constitution:
Article I, Section 2:
‘The House of Representatives shall choose their speaker and other officers; and shall have the sole power of impeachment.’
Article I, Section 3:
‘The Senate shall have the sole power to try all impeachments. When sitting for that purpose, they shall be on oath or affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no person shall be convicted without the concurrence of two thirds of the members present.
‘Judgment in cases of impeachment shall not extend further than to removal from office, and disqualification to hold and enjoy any office of honor, trust or profit under the United States: but the party convicted shall nevertheless be liable and subject to indictment, trial, judgment and punishment, according to law.’
Article II, Section 4:
‘The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.’
As noted, these provisions apply to both the Congress (Article I) and the president (Article II).
The House and Senate are engaged separately (impeachment and trial).
For that matter, the mention of the Chief Justice of the Supreme Court as presiding over a Senate trial in Article I, Section 3 brings the judiciary into play.
The impeachment triumvirate
There is no other enumerated power in the Constitution that blends all three branches of government in quite this way.
This artful blending is why courts will allow the Congress greater leeway to take testimony on executive branch communications during impeachment, compared to non-impeachment situations when executive privilege would normally shield those conversations.
There is little precedent for how the impeachment power should be used in practice (although judges and some other officials have been impeached in addition to the three presidential impeachments).
The Senate seems more bound by tradition than the House.
The most important issue to bear in mind is that impeachment is essentially a political process.
It must be conducted fairly, but it is not subject to strict procedural rules as is the case in normal judicial proceedings.
There is some room for improvisation and for surprises in the House impeachment process.
But, in the end, the Senate has the last word.
Stock markets don’t care
Stock Markets are more resilient than many observers believe.
Markets can deal with good news and bad news.
They can rally strongly based on good economic news and ‘animal spirits’, and they can correct sharply when the economy turns down. Still, investors can survive both.
You can even make money in bear markets if you can spot the few winners, short the losers and move to cash.
There is only one condition that markets do not handle well — uncertainty.
When uncertainty reigns, it’s impossible to know what comes next.
You can’t position for a bear market because the uncertainty may disappear or be resolved uneventfully. You can’t position for a bull market because the uncertainty factor may grow worse and actually lead to a catastrophic outcome.
The best shelter for investors in a high state of uncertainty is to increase allocations to gold, US Treasuries and cash, while reducing exposure to stocks.
Of course, this course of action takes the stock market down on uncertainty alone.
Trump to 2025?
Over at Strategic Intelligence Australia I explained to subscribers Trump would most likely be acquitted.
Both major US indices have rallied more than 3% since Donald Trump was cleared.
This could prove a further catalyst for higher stock prices and even drive the stock market to new highs.
Investors who are nimble can profit from this move.
The biggest winner will be Donald J Trump. His election odds go up as a result of the farce the Democrats have made out of the solemn process of impeachment.
All the best,
PS: In a brand-new report titled ‘The Looming Aussie Recession and How to Survive It’, Nick Hubble reveals why a recession in Australia is inevitable and three steps to recession-proof your wealth. Click here to receive your free report.